Mike Damazo started building wealth through his roommate-style house hack in a single-family home. He was able to tackle this project while working for the US Navy. He shares his story with us today.
House Hacking Case Study
Mike decided to complete a house hack in 2013. The goal was to get into real estate to build wealth and increase his savings. House hacking seemed like an attainable strategy, so he spent some time learning about the strategy from popular podcasts.
The House Hack
In 2013, Mike bought a property in Fresno, California. At the time, he was renting a room for $400 per month. So house hacking seemed to offer a solution to save on housing costs while working towards his long-term goals.
Updating the Units
When Mike bought the house, he decided to implement some updates. He put in new floors and repainted the walls before seeking out tenants.
Since it was a roommate style house hack, Mike wanted to be comfortable with his roommates. With that, he decided to approach two of his coworkers. Luckily, they were happy to move into Mike's place and pay rent.
The Numbers of the Deal
It's time to find out exactly how profitable this house hacking strategy was!
Mike was able to secure financing without putting any money down through a USDA loan. The interest rate on the loan was 4.38%. With that, the monthly mortgage came out to $1,150.60.
Mike was able to rent out two bedrooms for $500 each and collect a total of $1,000 in rent each month.
Let's take a closer look at these numbers for the first duplex:
- Monthly housing expenses before house hacking: $400
- Gross Rent: $1,000
- Mortgage payment: $1,150
- Cashflow before maintenance and vacancies: -150
- Housing savings: $350
Although Mike was very close to breaking even, he was able to dramatically reduce his housing expense. That allowed hi to supercharge his savings and take steps towards building wealth.
The Learning Curve
Looking back, Mike wishes that he had created a project timeline to help him track the renovations to his new property.
However, he would recommend house hacking as a viable strategy for wealth building.
Get In Touch
If you'd like to find out more about Mike's story, then take the opportunity to connect with him! You can find him on Twitter @Mikedamazo, Instagram @Fitness.wealth, or on YouTube @Damazo.
The Bottom Line
Mike was able to build wealth with the help of a roommate style house hack. Could this be the right fit for you?
Be sure to check out next week's house hack case study with Willie!
If you are interested in creating your own house hacking story, then check out our ultimate guide, listen to our house hacking podcast, or read more case studies for inspiration. You never know how dramatically your life can change through this one choice!
If you choose to pursue a house hack of your own, then please share your story with us! We would love to showcase your success.
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